Russia, Saudi agree to oil output freeze
February 16, 2016, 4:43 pm

Saudi Oil Minister Ali al-Naimi, seen here center in a file photo, says the freeze should stabilize markets [Xinhua]

The agreement was largely a compromise reached by the biggest oil producers – Russia and Saudi Arabia – but fell short of the curb in quotas other countries such as Venezuela had been hoping for.

OPEC has traditionally produced 30.5 million barrels a day, with Saudi Arabia’s output accounting for a third of that figure.

But since January, when OPEC removed output ceilings, OPEC has been producing at least 33.5 million barrels a day, well over current global demand.

Russia, on its own and as a non-member of OPEC, produces nearly 11 million barrels a day.

Mohammed bin Saleh, the Qatari energy minister, told a press conference that the measure, while short of hopes, would still work toward stabilizing already tumultuous energy markets.

Saudi Oil Minister Ali Al-Naimi for his part said that the freeze was enough at the present time.

“Freezing now at the January level is adequate for the market, we believe,” he said.

He said that the freeze was the beginning of a process which will be reviewed in the coming markets to determine whether further measures will be required.

But investors weren’t buying.

US benchmark West Texas Intermediate crude, which had risen some four per cent to $30.73 ahead of the Doha summit, reversed gains and fell 2.28 per cent, again below the symbolic $30-level to $28.77 at press time.

International benchmark Brent Crude for April delivery, which was up 4.07 per cent to $34.07 ahead of trading opening in London today, fell 3.2 per cent to $32.32 at press time.

Fears that the Russian-Saudi-OPEC moved will be insufficient in the face of overstock also played a role in reversing early gains in the oil markets.

The BRICS Post with inputs from Agencies